Posts belonging to Category currencies



Why Turkey’s currency is plunging

Turkey’s currency and stock market kept on falling

Turkey’s currency and stock market kept on falling Monday, weighed down by investor fears about the country’s economic policies and worsening relations with the United States. The lira fell as low as 6.89 to the dollar Monday, down about 7 percent on the day and 45 percent since the start of the year. The main stock index fell 3.5 percent.

Why is Turkey currency so weak? One reason is that cheap borrowing rates in major economies like the U.S. are rising, attracting investors’ money away from emerging economies like Turkey. Ultra-low interest rates in the U.S. and Europe had for years encouraged companies in Turkey to borrow in foreign currencies. That helped the economy, which booked 7 percent growth last year. But now the U.S. Federal Reserve is raising rates. That draws capital away from Turkey, weakening the currency. And it makes it more expensive for Turkish companies to repay the foreign currency debts, raising economic concerns that can further weaken the currency.

https://www.washingtonpost.com/

Why gold is plunging

Gold is supposed to be a haven

Why has the price fallen lately? Simply put, it’s the strong US dollar.

Expectations for more interest rate hikes by the Federal Reserve have helped lift the value of the currency.

A stronger dollar often is a bad thing for gold because it makes the metal more expensive for international investors.

http://www.cnn.com

Turkey could be the next emerging market to fall into crisis

The Turkish lira has now lost 27% of its value this year

Economists had been expecting the bank to hike rates to fight inflation, which topped 15% in June. Many observers said the unorthodox decision showed that President Recep Tayyip Erdogan, who supports lower interest rates, has increased his influence over the central bank.

http://www.cnn.com

Trump, EU agree to work on lowering tariffs

Averting a potential trade war

President Donald Trump on Wednesday said the United States and the European Union had launched a “new phase” in their relationship, saying that the two major economies would start negotiations immediately on a number of areas that include working toward “zero tariffs” on industrial goods, and further cooperation on energy issues.
“We agreed today, first of all, to work together towards zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods,” Trump said at a joint press conference in the White House Rose Garden with European Commission President Jean-Claude Juncker.

Trump did not address whether the two leaders had reached an agreement on car tariffs, though Juncker said that no new tariffs would be assessed as negotiations proceed. Economists have said that, among the major issues under discussion, tariffs on cars could be the biggest threat to the U.S. economy.

http://www.cnbc.com

The City of London just suffered a major defeat from the EU over plans for Brexit

Major blow to the UK’s financial services sector

The European Union late last week dealt a major blow to the UK’s financial services sector in the lead up to Brexit, after negotiators rejected the plans for the sector laid out by the British government in Prime Minister Theresa May’s controversial white paper. According to a report from the Financial Times, the EU’s chief negotiator Michel Barnier, last Friday told EU ministers that the financial services elements of May’s Brexit plans could not be accepted as they threatened to rob the bloc’s “decision-making autonomy” when it comes to finance.

The UK, earlier in July, proposed a new relationship between the highly interconnected financial services sectors of the UK and the EU that would involve a system of so-called “equivalence.” Under the plans in the white paper, the government said i t will seek to improve on existing requirements for equivalence of rules between the EU and outside countries.

Equivalence is a framework whereby the EU acknowledges that the legal, regulatory and supervisory regime of a non-EU country is as good as its own, and therefore allows that state access to the financial services sector within the bloc. Countries like Singapore and the USA already use a similar system to trade financial services with the EU.

http://www.businessinsider.com

BREXIT: Prepare for the worst

Brussels and Westminster run out of time

Even with the current heatwave and hosepipe ban, there is a chill in the air when it comes to Brexit. Repeat after me in a gravelly, Northern accent: “Winter is coming.” Britain is sweating under the pressure of a loud ticking countdown, and the EU is nervously glancing at its watch, looking away, and then frantically checking the time once again. Project Fear is becoming Project Reality as both Brussels and Westminster run out of time. Since Theresa May triggered Article 50 in March 29 last year, formally notifying the EU of Britain’s exit, the prime minister started a two-year process. In just two years, Britain would have to negotiate both its divorce and future relationship with the bloc.

In many ways, the British government has only got the ball rolling, producing its starting position on trade post-Brexit. And even then, it caused cabinet disarray, resulting in resignations from ministers including Brexit secretary David Davis and foreign secretary Boris Johnson. As time runs out, there are those who bracing themselves for the worst case scenario. Britain will leave the EU on March 29, 2019 (and with a transition period until December 31, 2020), but they could be doing so without completing a deal with the bloc.

Brexit secretary David Davis resigns

Government into crisis

David Davis has resigned as Brexit secretary, shattering the hard-won consensus around Theresa May’s Chequers deal and plunging her government into crisis.

His resignation was swiftly followed by that of fellow Department for Exiting the EU ministers Steve Baker and Suella Braverman. It forces May to reshuffle her government, at the same time as trying to convince backbenchers to support her plan.

Davis sent a bluntly worded resignation letter to Theresa May, saying he would not be a “reluctant conscript” to the plan agreed at Chequers, which he said was “certainly not returning control of our laws in any real sense”.

https://www.the guardian.com/

Does Trump plan to quit the World Trade Organization?

Better WTO Treatment

President Donald Trump said he doesn’t plan to withdraw from the World Trade Organization (WTO), but wants the U.S. needs to be treated more fairly by the global body.The U.S. won’t exit the Geneva-based organization “at this point,” Trump said Friday. His top White House trade adviser hedged on the question on Saturday, saying any decision was up to the president, and pushed back at critics of U.S. trade moves from companies including auto-maker General Motors Co.

Axios news agency reported earlier in the day that Trump had repeatedly told top White House officials he wants to exit the WTO, citing people familiar with Trump’s thinking. The Stoxx Europe 600 Index and U.S. futures wobbled on the story before recovering. Earlier Friday, White House officials sought to ease concerns over the report, with Treasury Secretary Steven Mnuchin calling it an “exaggeration.”

https://www.bloomberg.com/

Brexit: Airbus ‘set to quit’ UK

Tens of thousands of jobs at risk

Aerospace giant Airbus is preparing to quit Britain due to fears of a hard Brexit, potentially putting tens of thousands of jobs at risk, it was reported last night.

The European aerospace company, said to generate £1.7billion a year in tax, is set to abandon plans to build aircraft wings at its British plants, according to The Times.

Production will be moved to China, the US or elsewhere in Europe, rather than taking place here as was previously hoped. Airbus, which has factories in Bristol, Portsmouth, Stevenage and Broughton in north Wales, employs 14,000 people in the UK while a further 110,000 jobs are supported by its supply chain.

https://www.metronews.com/

Initial Coin Offerings are booming

1Q 2018 in Review

There’s a bear narrative in the air about ICOs and crypto currencies. It starts out by suggesting that last year was a bubble around Bitcoin, that many unscrupulous parties tried to jump on the bandwagon and take naive investors’ money. This spilled out in the fintech, crypto and public markets. See, for example, Long Island “Blockchain” being de-listed from NASDAQ. Or India cracking down on crypto currencies. Or the ban on Venezuelan crypto petro currency. And on top of this, regulators across the globe are recognizing Initial Coin Offerings for what they are — unregistered securities offerings from unlicensed institutions.

https://next.autonomous.com/

US and China to reach an agreement at trade talks

Package of  $200 billion

It will be very challenging for the U.S. and China to come to an agreement about trade this week, in part because the Trump administration has been “unclear in what it really wants,” a strategist said on Friday.

“On the one hand, the President remains very focused on the size of the bilateral trade deficit, and reportedly the Chinese has come to Washington with a package of about $200 billion worth of purchases that would certainly remedy a large portion of that deficit,” said Amy Celico, principal at the Albright Stonebridge Group, a global strategy and business advisory firm.

But on the other hand, the U.S. administration and Congress want China to change some of its behavior on unfair trade practices, and seek to put an end to subsidies for advanced technology industries and forced technology transfers.

https://www.cnbc.com/

Facebook to Launch its Own Cryptocurrency

Massive ICO

An exclusive source has confirmed to Finance Magnates that beleaguered social media giant Facebook is diversifying its product line with a cryptocurrency of its own – Facebook Coin (FBC). Users will have to register to use the coin, but Facebook will guarantee that wallets and transactions will be completely anonymous.
The development has not been officially announced, but reportedly the coin is to be launched on the Ethereum blockchain via an ICO within the next two weeks. Given the size and reach of Facebook, it seems safe to assume that the ICO will rival the 1.2 billion dollars that Telegram raised in its own funding round.

https://www.financemagnates.com/

Bitcoin’s victory

Wall Street Will SoonTrade Virtual Currency

Some of the biggest names on Wall Street are warming up to Bitcoin, a virtual currency that for nearly a decade has been consigned to the unregulated fringes of the financial world.

The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

The news of the virtual exchange, which has not been reported before, came after Goldman Sachs went public with its intention to open a Bitcoin trading unit — most likely the first of its kind at a Wall Street bank.

Venezuela’s economy is collapsing

Venezuela’s inflation could soar 13,000 percent by year’s end

Venezuela’s president says he’s boosting the minimum wage by 155 percent to keep up with runaway inflation that’s making it difficult for people to afford daily goods.

President Nicolas Maduro issued an order that brings the monthly wage to 1 million bolivars, or $1.61 on the commonly used black market. It’s the third increase this year. Despite having the world’s largest proven oil reserves, Venezuela is in its fifth year of an economic crisis worse than the Great Depression.

The International Monetary Fund has said it estimates that Venezuela’s inflation could soar 13,000 percent by year’s end.

Maduro will seek a second six-year term on May 20.

https://abcnews.go.com/

Britain unveils new fintech plans, including cryptocurrencies

G20:  no consensus for global regulation of cryptocurrencies

Britain announced a task force on Thursday to exploit the technology underpinning cryptoassets, such as bitcoin and other cryptocurrencies, as part of new plans to help fintech companies find more customers.

British finance minister Philip Hammond said he was committed to helping fintech grow and flourish by taking a series of domestic steps and forging links overseas.

“As part of that, a new task force will help the UK to manage the risks around cryptoassets, as well as harnessing the potential benefits of the underlying technology,” Hammond told a fintech conference hosted by the finance ministry.

Investors have flocked to cryptocurrencies like bitcoin despite wild price swings.

Regulators have warned that investors could lose all their money, but see promise in the blockchain technology that underpins cryptoassets.

Britain’s announcement comes after finance ministers from the Group of 20 richest economies (G20) were unable this week to find enough consensus for global regulation of cryptocurrencies.

http://www.reuters.com

Machines have replaced human stock market traders

Impact on the next financial crisis could be devastating

The February sell-off in stocks demonstrated the impact of automated trading on markets, according to Charles Himmelberg, Goldman Sachs’ cohead of global markets research.
“In this new market structure, machines have replaced humans, and speed has replaced capital,” Himmelberg said in a note.
This new ecosystem dominated by machines has dried up the sources of liquidity that would be needed in the next major wave of selling, he said.
http://www.businessinsider.com